Question 1

What is a mortgage pre-approval and why do I need one?

Accepted Answer

A pre-approval is a lender's written estimate of the maximum mortgage you qualify for, based on verified income, debts, and credit. In a competitive market it shows sellers your offer is financially solid, locks in a rate for 90–130 days, and tells you exactly what price range to shop in.

Question 2

How is my pre-approval amount calculated?

Accepted Answer

Lenders apply two ratios to your gross income: GDS (housing costs ≤ 39%) and TDS (housing costs plus all debt payments ≤ 44%) — both calculated at the stress test qualifying rate, which is the higher of your contract rate + 2% or 5.25%. The lower of the two ratio limits determines your maximum mortgage.

Question 3

Does a pre-approval guarantee I will get the mortgage?

Accepted Answer

No — a pre-approval is conditional. Final approval depends on the specific property (appraisal, condition), your finances not changing before closing, and lender policies. Avoid new debt, job changes, or large unexplained deposits between pre-approval and closing.

Question 4

Does getting pre-approved hurt my credit score?

Accepted Answer

A pre-approval involves one hard credit inquiry, which typically lowers your score by only a few points. Multiple mortgage inquiries within a short shopping window (usually 45 days) are treated as a single inquiry by Canadian credit bureaus.

Question 5

Can I include my spouse's income or basement suite rental income?

Accepted Answer

Yes — co-applicants' gross incomes are combined in full, which is often the single biggest boost to a pre-approval. Expected rental income from a legal secondary suite (like a basement apartment) also helps: most Canadian lenders add 50% of the gross rent to your qualifying income.

Question 6

Why did someone with the same income get a bigger pre-approval than this estimate?

Accepted Answer

Three common reasons: provincially regulated credit unions are not required to apply the federal stress test, so qualifying at your actual contract rate can approve roughly 20% more; a 30-year amortization (available to first-time buyers and new builds even with under 20% down since December 2024) adds about 7% versus 25 years; and lenders qualify with modest flat heating estimates rather than actual bills. Small differences in assumed property taxes and credit-score-based ratio limits also move the number.

Question 7

Does the Canada Child Benefit (CCB) count toward mortgage qualification?

Accepted Answer

Yes — most Canadian lenders count CCB at 100% of the monthly amount, provided the children are young enough (typically under 12–13) that the benefit will continue for at least three more years. Court-ordered child support, pensions, and long-term disability income also count. Because CCB is tax-free, some lenders even gross it up, treating it as worth more than its face value.

Mortgage Pre-Approval Calculator

How This Is Calculated

Mortgage Pre-Approval Calculator

How This Is Calculated